Information processing abnormalities in schizophrenia have been observed since the beginning of this century. Characterization of the abnormalities, their functional relevance and the neuronal circuits involved has remained elusive. Recent PET, electrophysiological and postmortem studies suggest that thalamic dysfunction could be a key to the abnormal sensory processing deficit observed in schizophrenia. Photic stimuli will be used as a standardized sensory challenge and the spectral power of EEG harmonic resonance response will be calculated and used as a measure of sensory processing. The thalamus and the thalamocortical connections are commonly believed to be a generator of alpha activity. The harmonic resonance to the photic stimulation frequencies particularly in the alpha range will be used as a probe of thalamic function. The spectral EEG following photic driving will be measured in 60 neuroleptic-free schizophrenic patients and compared to the EEG power in 30 normal controls. Forty of these schizophrenic patients will be tested before and after the treatment with clozapine, haloperidol, and placebo in a double-blind clinical trial. We predict that the energy of EEG harmonics in the alpha range following photic driving will be decreased in schizophrenics as compared to normal controls. The EEG abnormalities will normalize following treatment with haloperidol or clozapine in patients that respond to treatment but not in those patients who fail to respond to treatment.